Rupert Murdoch's News Corporation has warned that it is "not able to predict the ultimate outcome or cost" of the phone-hacking scandal, admitting it could "impair" its ability to conduct its business.

In its annual report filed on Wednesday, News Corp said its reputation could be damaged by the crisis that has engulfed the company and led to the closure of the News of the World.

The report also revealed that Freud Communications, the public relations firm run by Matthew Freud, Rupert Murdoch's son-in-law, was paid $202,000 (£122,000) by News Corp in the financial year ended 30 June 2011 for "press and publicity activities" related to Shine Group.

News Corp, which is the subject of a wide-ranging FBI investigation, said it was "not able to predict the ultimate outcome or cost" of the police investigations and civil actions related to alleged unlawful activity.

"UK and US regulators and governmental authorities are conducting investigations after allegations of phone hacking and inappropriate payments to police at our former publication, News of the World, and other related matters, including investigations into whether similar conduct may have occurred at the company's subsidiaries outside of the UK," said News Corp in its report.

"The company is co-operating fully with these investigations. It is possible that these proceedings could damage our reputation and might impair our ability to conduct our business."

The company later adds that "any fees, expenses, fines, penalties, judgments or settlements" related to the phone-hacking allegations "could affect [News Corp's] results of operations and financial condition".

News Corp is also facing five separate lawsuits from shareholders over the hacking scandal.

"The company and its board of directors believe these shareholder claims are entirely without merit, and intend to vigorously defend these actions," News Corp said in its filing.

Elsewhere in the report, it is revealed that Rupert Murdoch's wife Wendi Deng was paid $92,000 in 2010 and $100,000 in 2009 to "provide strategic advice" to Myspace in China.

News Corp recorded a total loss of $254m on Myspace before it was sold for $35m to a consortium including the singer and actor Justin Timberlake in June.

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